To Buy, To Rent or To Lease?

Most of us choose to buy a car, particularly when we’re looking to use it for personal use. For those occasional users though who don’t need to take to the wheel very often and for those companies who provide a car as part of their employment package it can be interesting to evaluate the costs and benefits to each method of obtaining a car, whether you buy, lease or rent.
Buying
For businesses, buying cars to offer to their employees rarely proves the most cost-effective method of mobilising their workforce. First off there’s significant and rapid depreciation across most car makes and models – some do hold their value better than others but whichever way you look at it, buying will ultimately lose you money. Another thing to consider is the rate at which new cars are continually being brought to the market, if you do choose to buy a car to give to an employee, chances are that in a year or two it could look dated and in extreme cases negatively affect a potential client’s first opinion of your business.
Leasing
Leasing is almost an equivalent to the interim arrangement between buying and renting and is a popular choice for many businesses across a range of industries. Companies have the vehicle usually for a few years after which they can upgrade to a newer model. Leasing arrangements are also commonly associated with less expensive monthly fees and so for this reason, can be a favourable alternative. However there are also commonly mileage restrictions on lease cars which if you have to unexpectedly travel further than anticipated can rack up significant costs. They may also place limits on a company if, for example employees refrain from attending certain events or travelling to meet certain potential customers because they are on the verge of exceeding their mileage allowance and don’t want to incur any additional costs.
Hiring
A number of firms now offer long term car hires which although may appear and sound more expensive initially, can actually prove a very cost effective option. Car hire company Avis recently put some facts and figures together discovering that in a lot of situations, renting a company car can be the best move. Lease durations tend to be over a couple of years – but what if you have an employee on a 3 month probation period before they begin their permanent employment? Or perhaps you have no idea what sort of mileage the employee will need to cover in their job? Being stuck with an idle car you are paying for and not using is totally inefficient, whereas hiring as and when you need if you can’t afford the security of knowing your mileage and time requirements can save you a lot of money. Finally, with longer term car hires increasing in popularity the relative costs of these when compared with other options is on the decrease anyway – it seems more and more people are catching on!